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Parking Perplexities Facing Developers

Posted on August 21, 2019

By Mark L. Elliott, David C. Kirk and Jenna E. Lee

Shared parking paired with technology offers solutions for changes in building usage.

Providing parking for commercial properties has always been a challenge for developers, but it’s even more so today. Why?

First, no one really knows where parking needs and requirements are heading, especially for commercial office space. On one hand, there is the densification of work space, which has seen the square footage per employee decrease. According to research from Cushman & Wakefield, the national average in 2018 was 194 square feet per employee, which is down 8.3 percent from 2009. That suggests more parking is needed for office users and their buildings, which now have more people working in the same amount of space.

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Industrial Demand Forecast Decreases as Economy Slows

Posted on August 19, 2019

By Dr. Hany Guirguis and Dr. Joshua Harris

The NAIOP Research Foundation has published the NAIOP Industrial Space Demand Forecast for Q3 2019.

Key Takeaways

  • The forecast for net industrial space demand has decreased amid slower growth in the U.S. economy. Absorption is now expected to average 37 million square feet per quarter for the next two years. This is a significant slowdown from the average 60 million square feet of quarterly net absorption experienced during 2017 and 2018.  
  • The average quarterly completions fell to 42 million square feet in the first half of 2019, down from an average of 54 million square feet per quarter during 2017 and 2018. Supply and demand are likely to stay in balance for the industrial sector; therefore, rents and vacancy rates should remain stable in many markets nationwide. 
  • A recession is not likely in the near term, but a general slowdown appears already underway; the first report of GDP growth in the second quarter fell to 2.1% from the 3.1% annualized result of the first quarter.
View the Forecast

Opportunity Zones Investment Strategies Take Hold

Posted on August 14, 2019

By Rich Tucker

In an era of divided government and even more divided politics, there are still public policies that can unite the left and right. One is opportunity zones.

Opportunity zones (OZs) – defined by the IRS as economically-distressed communities where new investments, under certain conditions, may be eligible for preferential tax treatment – were added to the tax code by the Tax Cuts and Jobs Act of 2017.

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Real Estate Industry Legislative Priorities Continue to Advance in Raleigh

Posted on August 13, 2019

Despite the ongoing stalemate over the state budget, legislation supported by the real estate and home building industry continues to make progress in Raleigh. Over the past few weeks, Governor Cooper has signed into law a variety of bills supported by the North Carolina Home Builders Association (NCHBA), the North Carolina Realtors®, NAIOP North Carolina, and other trade groups. Here’s a summary of some of the key laws that will benefit the residential and commercial real estate industries in the years ahead:

  • HB 675 — 2019 Building Code Regulatory Reform, sponsored by Representatives Mark Brody (R-Union), Dennis Riddell (R-Alamance), Jon Hardister (R-Guilford), and Billy Richardson (D-Cumberland). This is the fifth successful bill over the past several sessions of major reforms to the state building code and inspections process Key provisions in this year’s act include:
    • Prohibits local governments from requiring developers/builders to bury existing power lines or bury relocated power lines that are located outside the subdivision.
    • Prohibits local governments from setting minimum square footage requirements for residential structures.
    • Requires the North Carolina Building Code Council to conduct a cost/benefit analysis for all proposed changes to the North Carolina Energy Conservation Code since January 1, 2018.
    • Requires the North Carolina Building Code Council to create an inspection form to be used by engineers and architects and clarifies that they can inspect foundations and underslabs.
    • Adds a new level of inspector, residential changeout inspector, to assist with minor inspections.
    • Requires that a local government chooses to have plan review that the initial review for residential building plans must be performed within fifteen (15) business days after submission.
    • Requires that a local government can issue a temporary certificate of occupancy if the requirements of the NC Building Code are met.
  • HB 492 — Simplify Builder Inventory Exclusion, sponsored by Representatives Mark Brody (R-Union), Julia Howard (R-Davie), and Brian Turner (D-Buncombe), will eliminate the need for a builder to file annually in order to take advantage of an important property tax exclusion.The new law permits a builder to file a one-time application to claim an exemption from higher property taxes on land and houses held for sale by a builder to the extent that the tax increase is attributable to subdivision of the property or improvements made such as the installation of infrastructure or the construction of a single-family or duplex house on the property.
  • HB 620 — Street Database/Manual/Public Record Exemption, requires the North Carolina Department of Transportation to create a “Public Street Information Database”, by 01/10/20 and update it regularly, for the purpose of conveying the status of roads within the State. This publicly-available database will indicate whether the road is (1) federally owned, (2) State-owned with State road number assigned, or (3) State-maintained with a State road number assigned.
  • SB 355 — Land-Use Regulatory Changes, sponsored by Senators Dan Bishop (R-Mecklenburg), Paul Newton (R-Cabarrus) and Sam Searcy (D-Wake), helps level the playing field between landowners and local governments by integrating permit choice and vesting laws to ensure that the rules are not changed in the middle of a development project. In addition, the law:
    • Protects landowners against 3rd party rezoning efforts
    • Allows certain claims to bypass the Board of Adjustment and proceed to Superior Court.
    • Places limits on conditional zoning abuse, while preserving flexibility for developers.
  • SB 523 — Revenue Laws Clarifying & Administrative Changes, requires Property Management companies to charge and remit RMI sales tax only in the following circumstances:
    1. They provide repair, maintenance, installation services for an additional charge above what is stated in the management contract.
    2. They arrange for a third party to provide the repair, maintenance, and installation services and impose an additional charge for arranging these services.
    3. More than twenty-five percent (25%) of the time spent managing an individual real property during a billing or invoice period is attributable to taxable repair, maintenance, and installation services. The property manager can voluntarily provide a written affidavit to attest that no more than 25% of their services on a given property constitute taxable RMI services, which would clear them of liability for taxation on any portion of the contract amount.

Source: NCHBA & NC Realtors®

Eight Things to Know About Industrial Real Estate Demand

Posted on August 12, 2019

By Gillam Campbell

Tariffs are in the air, but dealmaking continues on the ground in the U.S. industrial property market. Despite a slight softening, vacancy continues to hover at all-time historic lows. So, what’s driving the action? The following are eight things to know about demand for industrial property, according to JLL’s latest research Cheat Sheet:

  1. More tenants on the move, more locations needed. A year ago, our research showed 1,200 tenants seeking 439 million square feet of space. Now, roughly 1,600 tenants are in the market, looking for approximately 600 million square feet of space. The growing number of tenants includes not only new-to-market occupiers, but also companies that are looking to expand or replace square footage – whether  that means a last-mile e-commerce delivery center close to consumers or a more modern, flat-floor big-box warehouse that is ready for today’s high-tech distribution.
  2. Less is more when it comes to square footage. As consumers begin to expect next-day or even same-day delivery from their e-tailers, distribution strategies increasingly include smaller delivery centers, some of them in urban infill locations, that help companies cover the last mile to the customer. No wonder the average square footage requirement has shrunk by 10,000 square feet over the past year to reach 360,000 square feet.
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The Future of 5G in the Commercial Real Estate Industry

Posted on August 9, 2019

By Jeff Gudewicz

According to the Pew Research Center, 95 percent of Americans own a cellphone, with 77 percent owning smartphones. As traditional broadband usage has dropped in recent years, keeping tenants connected through a cellular signal has become more important than ever for those who want to stay competitive in the commercial real estate industry. And with 5G on the horizon and poised to become a disruptive threat to traditional Wi-Fi and wired internet systems, as well as a key force behind the rise of smart cities, connectivity is going to become more integral to daily life than ever before.

What is 5G?

5G, or the fifth generation of wireless technology, is a standard designed to deliver data speeds greater than 1 gigabit per second and low latency of less than 1 millisecond. This means much faster data speeds (100 times the speed of 4G LTE) and less delay between the request for a data transfer and the start of the data transfer in a cellular environment.

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City Hosting Meeting Next Wednesday on Sign, Tree Ordinance Revisions

Posted on August 9, 2019

New Report: Addressing the Workforce Skills Gap in Construction and CRE-related Trades

The NAIOP Research Foundation has published a new report titled "Addressing the Workforce Skills Gap in Construction and CRE-related Trades," by Barry E. Stern, Ph.D.

A shortage of construction and logistics workers has increased the cost of construction for developers and hampered the expansion and profitability of warehouse and distribution centers. The NAIOP Research Foundation commissioned this report to explore some of the contributing factors to the workforce shortage and how the construction and logistics industries can improve worker recruitment, training, productivity and retention.

Key Takeaways:

  • Contractors will increasingly need to adopt new technologies to improve worker productivity.
  • The most successful workforce development programs rely on multisector collaboration.
  • It is important to align workforce development programs with local trends.
  • Demonstrating that a job can be part of a long-term career is important to recruitment and retention in the logistics and construction industries.
  • The construction and logistics industries need to invest in training and recruiting high school students and recent graduates.
  • Investing in ongoing training for current employees ensures that workers have the latest skills and improves worker recruitment and retention.
 Download the Report

2019 REBIC BBQ & Candidate Meet & Greet is on August 28

Posted on August 2, 2019

REBIC’s annual BBQ & Candidate Meet & Greet is fast approaching on August 28, 2019! Make sure to get your tickets early! This annual bi-partisan Political Pig Pickin’ brings state and local candidates together with hundreds of members of the Charlotte real estate, homebuilders and development industries for an afternoon of food and fun!

WHEN: August 28, 11:30-1:30 p.m.

WHERE:  SMS Catering, 1764 Norland Rd., Charlotte, NC 28205 | View Map

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Charlotte Modifies Proposed Sign Ordinance to Allow Real Estate Directional Signs

Posted on July 31, 2019

Revised amendments to the Charlotte Sign Ordinance now permit the use of weekend directional signs for new home construction and real estate open houses, after REBIC raised objections to their elimination.

The proposed regulations for Temporary Off-Premises Signs now read as follows:

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Governor Cooper Signs Law Clarifying Taxation of Property Management Contracts

Posted on July 30, 2019

Governor Roy Cooper last week signed into law a bill supported by REBIC, the North Carolina Association of Realtors® (NCR), NAIOP Charlotte, BOMA Greater Charlotte, and other industry trade groups, clarifying that residential and commercial Property Management agreements are largely not subject to the state’s Repair, Maintenance & Installation (RMI) sales tax.

SB 523 — Revenue Laws Clarifying & Administrative Changes, passed the General Assembly earlier this month with an amendment that requires Property Management companies to charge and remit RMI sales tax only in the following circumstances:

  1. They provide repair, maintenance, installation services for an additional charge above what is stated in the management contract.
  2. They arrange for a third party to provide the repair, maintenance, and installation services and impose an additional charge for arranging these services.
  3. More than twenty-five percent (25%) of the time spent managing an individual real property during a billing or invoice period is attributable to taxable repair, maintenance, and installation services. The property manager can voluntarily provide a written affidavit to attest that no more than 25% of their services on a given property constitute taxable RMI services, which would clear them of liability for taxation on any portion of the contract amount.

The legislation also provides specific exclusions to RMI services, which help ensure much of the work done by property management companies is not subject to taxation. They are:

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Activating Public Spaces Can Attract Users, Create Community

Posted on July 26, 2019

By Angelo Carusi

A Nashville-area mixed-use development illustrates the uplifting potential of landscape architecture.

Mixed-use developers are devoting premium real estate to outdoor public spaces that invite the community to linger. These communal areas are continually being repurposed and reimagined through bold and creative design strategies.

The design for dynamic, open-air gathering spaces can be as important as the design for revenue-generating real estate products. Physical spaces that promote dwell time are increasingly appreciated by tenants and end users. Outdoor “rooms” where people pause to sit with a cup of coffee, watch their children play, respond to emails and texts or enjoy casual conversations are spaces where life, community, architecture and nature come together, allowing for meaningful experiences that encourage people to return to the property.

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Debt Ceiling Talks Continue as Senators Reintroduce Energy Bill

Posted on July 25, 2019

Republican Rob Portman of Ohio and Democrat Jeanne Shaheen of New Hampshire reintroduced a bipartisan bill in the Senate last week. S.2137 aims to improve energy efficiency in buildings, industrial facilities, and throughout the federal government.

NAIOP supports legislation that ensures that energy-efficiency building codes are developed subject to the federal rule-making process.

“This bill is a win-win, creating nearly 200,000 new jobs and protecting our environment—all without a single new tax or mandate,” Senator Portman said. Senator Shaheen added: “Our bipartisan legislation would create jobs in the private sector, save families and businesses money, and drastically reduce pollution in a smart, effective and affordable way.”

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Charlotte Sign Ordinance Amendments Appear to Ban Real Estate Directional Signs

Posted July 24, 2019

Proposed amendments to the Charlotte Sign Ordinance appear to ban weekend directional signs for new home construction and real estate open houses — a change with potentially devastating impacts for home builders and Realtors®, and one which REBIC will strongly oppose.

Weekend directional signs are one of the most effective tools buyers use to find homes for sale. Particularly in Charlotte, where most new home communities are in hard-to-find, infill locations (and often not yet identified on GPS), a ban on temporary directional signs would severely impact home sales, which are already falling due a lack of inventory.

The proposed Sign Ordinance amendments were presented at a community informational meeting last week, but no mention was made of the ban on temporary signs. The ban, however, is included on page 40 of the draft text, under ‘Prohibited Signs’:

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General Assembly Passes Legislation to Clarify Taxation of Property Management Contracts

Posted on July 23, 2019

The North Carolina General Assembly last week passed legislation supported by REBIC, the North Carolina Association of Realtors® (NCR), NAIOP Charlotte, and other industry trade groups that would clarify that residential and commercial Property Management agreements are largely not subject to the state’s Repair, Maintenance & Installation (RMI) sales tax.

SB 523 — Revenue Laws Clarifying & Administrative Changes, passed the Senate on Thursday with an amendment that requires Property Management companies to charge and remit RMI sales tax only in the following circumstances:

  1. They provide repair, maintenance, installation services for an additional charge above what is stated in the management contract.
  2. They arrange for a third party to provide the repair, maintenance, and installation services and impose an additional charge for arranging these services.
  3. More than twenty-five percent (25%) of the time spent managing an individual real property during a billing or invoice period is attributable to taxable repair, maintenance, and installation services. The property manager can voluntarily provide a written affidavit to attest that no more than 25% of their services on a given property constitute taxable RMI services, which would clear them of liability for taxation on any portion of the contract amount.

The legislation also provides specific exclusions to RMI services, which help ensure much of the work done by property management companies is not subject to taxation. They are:

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Business NC Accepting Nominations for Annual Building NC Awards

Posted on July 22, 2019

Business North Carolina and Manning Fulton are seeking nominations for the annual Building North Carolina awards, which will be featured in the November issue. Submit your suggestions on the most important commercial real-estate projects completed in the state between July 1, 2018 and June 30, 2019 and the developer who has had the biggest impact on the industry.

Building North Carolina winners will be selected based on design, innovation and community impact in such categories as best public project, commercial project, renovation and overall design.

Nominations close July 31 2019.

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Lawmakers Address Infrastructure and the Debt Ceiling as Recess Approaches

Posted on July 19, 2019

The Senate Committee on Environment and Public Works held a hearing last week on the need for a multiyear reauthorization of highway transportation infrastructure programs. Expanded infrastructure investment, for surface transportation and for broader infrastructure needs, is one of NAIOP’s 2019 legislative priority issues.

While the issue is often described as an area where bipartisan cooperation is possible, Congress is divided on how to pay for any new programs, and the Trump administration has not submitted a detailed legislative proposal to Congress. 

The Senate committee hearing is a first step in moving legislation reauthorizing highway programs. “It is our shared goal to advance a bill out of committee this summer,” Republican committee chairman John Barrasso (R-WY) said. “In our legislation, we must reduce the time it takes for federal permitting, we need to lower paperwork burdens on states, and we need to incorporate innovative construction approaches and other technologies.”

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Expanding Applications for Modular Construction

Posted on July 18, 2019

By Shawn Moura

Modular construction has come a long way since a 2010 issue of Development magazine profiled the building process in “First Look – The Skyscraper’s New Look.” Commercial real estate developers are adopting modular construction – in which building components are manufactured at a facility and then transported to a construction site for assembly – for a broader range of applications and for larger projects. The process is best suited to projects that primarily consist of repeated and uniform spaces. For these projects, modular construction can substantially reduce construction time and improve quality control.

The extent to which modular construction relies on prefabrication varies from project to project. Writing for the New England Real Estate Journal, architect Henry Wheeler explains that projects can range from incorporating prefabricated electrical and plumbing system kits to partial modular construction (where portions of a room are assembled as a pod that is placed into a building) to full modular construction, where entire rooms are manufactured offsite and installed on-site. In the case of hotel rooms that are assembled using full modular construction, “every room element is pre-fabricated and replicated including the walls, windows, carpet, fixtures, accessories, and even artwork.”

Click here to read more.

City of Charlotte Progresses in Enhancing Development Services

Posted on July 17, 2019

On July 8, Charlotte City Council voted to approve construction of the first floor of the Charlotte-Mecklenburg Government Center for a collaborative, multidepartmental development permitting facility.

Known as the CLT Development Center, the space will provide developers and design teams access to city review staff in a single location for city development permitting services. This initiative brings together staff from all departments involved in permitting to create a more collaborative culture with new services to better meet customer needs.

“The CLT Development Center is the product of our efforts to have collaborative partnerships with the development community,” said City Manager Marcus D. Jones. “We are excited to bring new, innovative ways to work together to create great projects for Charlotte.”

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Blue Line Corridor Rezoning Informational Drop-In Meeting

You are invited to drop in (see hours below) to learn about the City of Charlotte’s plan to rezone land along the Blue Line light rail corridor, in order to align with the adopted recommended future land use and community vision. A presentation will be given at 15 minutes after the hour. City staff will be on hand to help with any questions.